o ur f iscal c hallenges early childhood care & education in w.va. wv early childhood planning...
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O U R F I S C A L C H A L L E N G E S E a r l y C h i l d h o o d C a r e & E d u c a ti o n i n W . V a .
WV Early Childhood Planning Task ForceSeptember 6– Committee Meeting. 11 a.m.-3 p.m.
TED BOETTNERExecutive Director
OVERVIEW
West Virginia’s Budget Outlook
Federal Budget & Sequester
Future WVCBP Analysis of Early Childhood Development Financing and Best Practices.
Questions
WEST VIRGINIA’S BASE BUDGET REVENUES (FY 14)
FY 2014
$4.1 Billion
$152 million $164 million $4.4 billion
Excess LotteryLotteryGeneral Revenue
WEST VIRGINIA’S BASE BUDGET (FY 14)$4.4 BILLION
Public Education47%
Higher Education11%
Military Afairs & Public Safety
8%
Judicial & Legislative3%
Senior Services1%
Other5%
Administration2%
Health & Human Resources
21%
Commerce2%
WEST VIRGINIA’S BASE REVENUE BUDGET (FY 14)
Personal Income39%
Sales & Use Tax27%
Severance Tax10%
Lottery Revenue8%
Other9%
B&O Tax2%
Corporate income & Business Franchise Tax
5%
GENERAL REVENUE FUND REVENUE GROWTH BELOW HISTORICAL AVERAGE (4.6%)
FY 1990
FY 1992
FY 1994
FY 1996
FY 1998
FY 2000
FY 2002
FY 2004
FY 2006
FY 2008
FY 2010
FY 2012
FY 2014
FY 2016
FY 2018
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
ProjectedActual Collec-tions
Average growth rate1990-2008
Expr
esse
d in
bill
ions
SIGNIFICANT BUDGET GAPS AHEAD ($ MILLIONS)
FY 2015 FY 2016 FY 2017 FY 2018
-$264,791
-$192,028
-$108,960-$82,276
MAJOR BUDGET GAP DRIVERS
Sluggish economic recovery Medicaid growth Revenue problem:
Reduction in Corporate Net Income and Business Franchise Tax: -$191 million
Food tax elimination: -$174 million Thin-seam coal tax credit has grown from $23.5 million in 2006 to
$75 million in 2011. Estate tax elimination: -$10-20 million per year. Declining lottery, B&O, and severance tax collection.
WEST VIRGINIA STILL SUFFERING FROM HIGH UNEMPLOYMENT
200020002001200220032004200520052006200720082009201020102011201220130.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
PERSONAL INCOME GROWTH HAS NOT CAUGHT UP
2005 2006 2007 2008 2009 2010 2011 2012 2013$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$64.1
Average Growth Rate 1990-2008 $71.9
WV
Pers
onal
Inco
me
(Bill
ions
$)
MEDICAID GROWING BY 7.6% ANNUALLY
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
$815.9$911.5 $953.1 $997.6
$1,070.4
In m
illio
n $
BUSINESS TAXES SHRINKING AS A SHARE OF WV GENERAL REVENUE FUNDS
FY 1990
FY 1992
FY 1994
FY 1996
FY 1998
FY 2000
FY 2002
FY 2004
FY 2006
FY 2008
FY 2010
FY 2012
FY 2014
FY 2016
FY 2018
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Corp
orat
e N
et In
com
e an
d Bu
sine
ss F
ranc
hise
Tax
Col
lecti
ons
(in
tho
usan
ds)
Shar
e of
W.V
a. G
ener
al R
even
ue F
unds
SALES TAX BASE IS SHRINKING PARTLY FROM FOOD TAX ELIMINATION
FY 1990
FY 1992
FY 1994
FY 1996
FY 1998
FY 2000
FY 2002
FY 2004
FY 2006
FY 2008
FY 2010
FY 2012
FY 2014
FY 2016
FY 2018
$0.0
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
Personal Income Tax Consumer Sales and Use Tax
Growth of Major Sources of Revenue FY 2012 to FY 2018 (estimated)
Lottery Funds (-33%)
Business & Occupation Tax (-15%)
Severance Tax (-13%)
Tobacco Tax (-5%)
Corporate Income/Business Franchise Tax (-3%)
Sales & Use Tax (12%)
Personal Income Tax (33%)
-40% -30% -20% -10% 0% 10% 20% 30% 40%
WEST VIRGINIA’S RAINY DAY FUNDS
2008 2009 2010 2011 2012$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Bala
nce
in m
illiio
ns
As a
sha
re o
f gen
eral
reve
nue
2013 SEQUESTRATION BREAKDOWN
Defense Domestic Discretionary Medicare Other Mandatory
$42.7
$25.8
$11.3 $5.5
Billi
ons
Impact of Sequester Cuts on West Virginia
Job Losses: 982 jobs in defense and 9,065 in non-defense (Stephen Fuller @GMU).
$76 million in cuts in federal grant funding in FY 2013 relative to FY 2012 (EPI).
Cuts to ARC funding, child care, Head Start, job training, work study, special education, domestic violence, law enforcement, clean air and water, meals for seniors, vaccines, and army bases.
Between 2014 and 2021, sequestration will reduce federal spending by $109.3 billion per year.
Sequester Cuts on Head Start in WV
$3 million in Cuts: 400 children in West Virginia slated to lose Head Start and Early Head Start this year and 80 Head Start workers laid off.
Options: Use school-aid formula and Pre-4 program to pick up
some of the kids. Earmark funds to program like other states (MN). Stave off cutting by cutting other parts of the program.
WVCBP Analysis of Early Childhood Development Financing and Best Practices
Compare WV early childhood program spending with other states. Specially, Birth to Three, Home Visiting, Head Start, Child Care Assistance, and Pre-K.
In-depth analysis of WV’s fiscal position, including fiscal capacity.
Options for funding early childhood programs. Explore feasibility of social revenue bonds for
financing early childhood programs.
QUESTIONS?
Sources used in this presentation: U.S. Bureau of Labor Statistics and Bureau of Economic Analysis and W.V. Budget Office data.